Interleukin 27 (IL-27) was first characterized as a proinflammatory cytokine with T helper type 1-inducing activity. However, subsequent work has demonstrated that mice deficient in IL-27 receptor (IL-27R alpha) show exacerbated inflammatory responses to a variety of challenges, suggesting that IL-27 has important immunoregulatory functions in vivo. Here we demonstrate that IL-27R alpha-deficient mice were hypersusceptible to experimental autoimmune encephalomyelitis and generated more IL-17-producing T helper cells. IL-27 acted directly on effector T cells to suppress the development of IL-17-producing T helper cells mediated by IL-6 and transforming growth factor-beta. This suppressive activity was dependent on the transcription factor STAT1 and was independent of interferon-gamma. Finally, IL-27 suppressed IL-6-mediated T cell proliferation. These data provide a mechanistic explanation for the IL-27-mediated immune suppression noted in several in vivo models of inflammation.